Brent, WTI Prices Rise as Crude Inventories Drop

At the market yesterday, Brent crude futures gained 77 cents or 1.05 per cent to close at $73.79 per barrel and the US West Texas Intermediate (WTI) crude futures expanded by 65 cents or 0.94 per cent to $69.65 a barrel.

Crude oil inventories in the US saw a decrease of 3.3 million barrels during the week ending March 21, according to the latest data from the US Energy Information Administration (EIA) released on Wednesday.

On Tuesday, the American Petroleum Institute (API) reported a draw of 4.6 million barrels in US crude oil inventories amid a strong gasoline (petrol) draw.

For total motor gasoline, the EIA estimated that inventories decreased 1.4 million barrels for the week to March 21, with production averaging 9.2 million barrels daily. This compares with an inventory decrease of 500,000 barrels for the previous week and an average daily production of 9.6 million barrels.

For middle distillates, the EIA estimated another inventory decrease, this time of 400,000 barrels, with production decreasing to an average of 4.5 million barrels daily. This compares to an inventory dip of 2.8 million barrels in the week prior, when production stood at an average of 4.6 million barrels daily.

Prices were also supported amid mounting concerns about tighter global supply following the US threat of tariffs on nations buying Venezuelan crude.

Trade in Venezuelan oil to top buyer China stalled after US President Donald Trump threatened tariffs on countries buying from the member of the Organisation of the Petroleum Exporting Countries (OPEC).

Reuters reported that Venezuela could potentially lose $4.9 billion in revenue, accounting for over 10 per cent of its GDP.

Oil is Venezuela’s main export, and China is already a target of US import tariffs after the US sanctions previously targeted China’s imports from Iran.

Since China isn’t that exposed to US regulations, Chinese traders and refiners said they were waiting to see if the government would direct them to stop buying.

Earlier this week, President Trump signed an executive order authorizing blanket 25 per cent tariffs on imports from any country that buys Venezuelan crude oil and liquid fuels.

OPEC and its allies, OPEC+ may be ramping up production in anticipation of potential US sanctions, and this could potentially offset a loss of up to 1.5 million barrels per day of Iranian exports without destabilizing global oil prices.

Also capping oil price gains, the US reached deals with Ukraine and Russia to pause attacks at sea and against energy targets, with the US agreeing to push to lift some sanctions against Russia.